Aurizon cancels $91m SAP systems overhaul

Rail freight giant Aurizon has cancelled its $91 million effort to standardise legacy systems onto a single SAP platform after an internal review found the project was at risk of delays and overspend.

In early 2014 the company revealed its plan to consolidate 18 separate legacy systems for logistics, planning, scheduling, ordering, and billing onto SAP HANA and SAP’s supply chain execution (SCE) platform 9.1.

The rail operator at the time said the system would improve visibility across the supply chain by "integrating long and short-term planning with resource availability and customer demand".

It had previously implemented SAP for ERP and asset maintenance, and called the HANA and supply chain platform a logical extension.

However, after three years the project will now be cancelled and an impairment charge of $64 million recorded in the company's first quarter FY17 results, Aurizon said today.

Around $27 million of the project's total $91 million cost remains capitalised for software and licenses that are still in use, it said.

Aurizon CEO Andrew Harding said the project was not delivering value for the business.

"[It] was at high risk of overspend and delays, and so it was stopped. By undertaking the freight review we're getting the granularity we need to to make informed decisions and to clearly understand the future value and potential of the business in this are," he told investors.

Aurizon delivered its first deployment of the freight management platform to customers and employees in the intermodal and bulk (east) businesses in December 2015, and to its coal business in May last year.

At the time of its full-year results last August, Aurizon had spent $79 million on the project.

Aurizon did not detail its plans for its legacy systems now that it has chosen not to move forward with the SAP platform.